Kodiak Gas Services, Inc. (KGS)

Return on equity (ROE)

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income US$ in thousands 49,895 20,066 106,265 180,963 -2,185
Total stockholders’ equity US$ in thousands 1,359,910 1,142,650 229,093 960,071 755,286
ROE 3.67% 1.76% 46.39% 18.85% -0.29%

December 31, 2024 calculation

ROE = Net income ÷ Total stockholders’ equity
= $49,895K ÷ $1,359,910K
= 3.67%

The return on equity (ROE) of Kodiak Gas Services, Inc. exhibits significant fluctuations over the specified period from December 31, 2020, to December 31, 2024. At the end of 2020, the company reported a negative ROE of -0.29%, indicating that the company was operating at a loss relative to shareholders’ equity during that year. This negative figure suggests challenges in profitability or potential losses impacting shareholder value.

In 2021, the ROE experienced a substantial positive shift, reaching 18.85%. This sharp increase signifies a meaningful improvement in the company's profitability and efficiency in generating returns from shareholders’ equity. It indicates that the company successfully transitioned from a tentative or loss-making position to generating solid profits relative to its equity base.

The upward trend persisted into 2022, with ROE reaching 46.39%. This indicates an exceptional level of profitability and suggests that the company achieved strong operational performance, allowing shareholders to benefit from significantly higher returns on their invested capital. The marked rise reflects either improved operational efficiency, higher net income, or both.

However, the subsequent two years show a pronounced decline in ROE. In 2023, the ROE dropped sharply to 1.76%, indicating a substantial erosion of previously high profitability levels. This decline could be attributable to decreased net income, increased expenses, or changes in the equity base. The precipitous fall suggests that the company faced challenges converting its assets into profits or experienced external or internal factors negatively impacting its financial performance.

By 2024, the ROE modestly increased to 3.67%, indicating a slight recovery or stabilization in profitability, though it remains well below the peak levels observed in 2022. The overall trend from 2021 through 2024 demonstrates a period of rapid growth followed by considerable volatility and a partial recovery, reflecting ongoing operational or market challenges affecting the company's ability to sustain high returns on shareholders’ equity.

In summary, Kodiak Gas Services, Inc.’s ROE illustrates a trajectory characterized by initial losses, rapid gains to high levels of profitability, followed by a sharp decline and a partial rebound. This pattern underscores the importance of analyzing underlying operational factors and external conditions that contributed to these significant fluctuations over the observed period.